How to establish a Unit Owners Association (SVJ) step by step

When an SVJ is Established and When It Is Voluntary

If an association of unit owners (SVJ) has not been established earlier, the unit owners shall establish it in a building with at least five units, of which at least four are owned by four different owners (Section 1198 of the Civil Code). The obligation therefore arises only when the building is occupied: five units are not enough, there must also be four different owners. Until then, establishment is voluntary.

In a building with fewer than five units, an SVJ can only be established with the consent of all unit owners. The law states this explicitly (Section 1199 of the Civil Code). Unit owners in a smaller building can therefore choose whether to manage the building as an association or in another form. The decision is up to everyone, and if any of them disagrees, the SVJ cannot be created.

These provisions do not set a firm deadline for establishment, but the obligation has a practical impact. Ownership rights to a unit being transferred to another owner will not be registered in the public register unless the establishment of the association of unit owners is proven (Section 1198(2) of the Civil Code). This rule must be read together with paragraph 1: it follows the obligation to establish an SVJ in an occupied building, not every sale. However, the law does not explicitly specify from which transfer the obstacle applies, and anyone who wants to sell further units should therefore have the SVJ registered in time, otherwise their transfer in the Land Registry will be halted.

The order is also important: the creation of units precedes the establishment of the SVJ. First, you divide the building into units by an owner's declaration, and only then does it make sense to establish an association. The owner's declaration and its requirements are discussed in the text on the owner's declaration for dividing real estate into units, which precedes everything described below.

How an SVJ is Created: Five Steps from Articles of Association to Registration

An association of unit owners is established by approving its articles of association, and it can be established even by a sole owner of all units. Approval of the articles of association requires their adoption at the constituent meeting by a majority of votes of all unit owners, or the agreement of all unit owners on their content (Section 1200 of the Civil Code). This implies the sequence of steps that is repeated in practice.

The first step is drafting the articles of association, because without them a meeting cannot be convened. The articles are prepared by the founder, most often the developer, or one of the owners with an advisor. The draft is distributed to the owners in advance so they can familiarize themselves with it. The more precise the draft, the fewer adjustments at the meeting and the shorter the meeting.

The second step is convening the constituent meeting. The invitation should contain what an owner reasonably needs to know: place, time, agenda, and the draft articles of association. A good invitation also makes it easier to defend later that the meeting was held properly.

The third step is the approval of the articles of association. The articles are adopted by a majority of votes of all unit owners, not just those present, which is why attendance must be monitored. To amend the articles of association before the establishment of the association, the consent of a majority of votes of all unit owners is required, unless the articles require a higher number (Section 1201 of the Civil Code). The draft is thus finalized before the meeting, but after approval, it can only be changed by the same majority.

The fourth step is a public instrument. The decision of the constituent meeting to adopt the articles of association is certified by a public instrument containing the approved text of the articles of association (Section 1200(4)); when established by agreement of all owners, the articles of association themselves have this form. The fifth step is the application for registration in the public register and the registration itself: the association of unit owners is created on the day of registration in the public register (Section 1204 of the Civil Code), specifically in the register of associations of unit owners maintained by the registry court (Section 1 of Act No. 304/2013 Coll.).

Who files the application for registration, what attachments must be enclosed, and what fees are paid is regulated by the Act on Public Registers and implementing regulations, and it is therefore worth verifying the current requirements with the registry court before filing. In practice, the application is prepared by an attorney or a notary, because an error in an attachment leads to a court summons and delay.

What the Articles of Association Must Contain

The articles of association must contain at least the name including the words "společenství vlastníků" (association of owners) and the designation of the building, the registered office located in the building (if not possible, in another suitable place), the membership rights and obligations of the unit owners, the determination of the bodies and their competence, the number of members of elected bodies and their term of office, the method of convening, negotiating, and decision-making, the determination of the first members of the statutory body, and rules for the administration of the building and land and the use of common parts (Section 1200(2) of the Civil Code). If any of these requirements are missing, the articles of association do not comply with the law.

The most common weak point is the determination of the first members of the statutory body. This is a mandatory requirement, but owners often postpone it for "later". This information can be removed from the articles of association after the establishment of the association, and the articles may entrust this decision to the statutory body (Section 1200(3)), so the law anticipates that this is temporary information. However, you must have it when establishing the association.

The statutory body is the committee, unless the articles of association specify that it is the chairman of the association. A member of an elected body can be anyone who is fully legally competent and of good character within the meaning of the regulations on trade licensing (Section 1205 of the Civil Code). Before the election, it is therefore worth verifying whether the candidates meet the requirement.

Good articles of association also contain what the law does not require. They specify deadlines for convening the assembly, decision-making outside of meetings (per rollam), which the law allows outside the case of an inquorate assembly only if the articles of association permit it (Section 1211 of the Civil Code), rules for advances on building administration, and procedures for disputes. Every such rule saves an argument later, so it pays to add them right at the establishment, not after the first conflict.

When You Need a Notary

If an association of unit owners is established by the adoption of the articles of association by all unit owners, the articles of association require the form of a public instrument (Section 1200(4) of the Civil Code). In addition, the decision of the constituent meeting to adopt the articles of association is certified by a public instrument containing the approved text of the articles of association. In practice, this form is provided by a notary through a notarial deed, which is why a notary is usually involved in establishing an SVJ with multiple owners.

The need for a notary depends on the method of establishment, not just the number of owners. At a constituent meeting, the decision on the articles of association is certified by a public instrument; in the case of agreement of all owners, the articles of association themselves have this form. On the contrary, it is not required where the SVJ is established by a sole owner of all units. The difference is crucial for a developer who approves the articles of association himself before the first sale, and for a building where there are already several owners and the articles of association are adopted at a meeting or by agreement of all.

In the area of establishing an SVJ, it is often advisable to consult the next steps under Czech legislation not only with an attorney but also with a notary. In this area, ARROWS cooperates with several proven notaries, such as notary Mgr. Silvie Dohnalová.

How to choose a notary? Three things are decisive. First, experience with participating in assemblies and registrations for SVJs, because a standard notarial deed for a contract is different work than a deed on the course of a meeting with dozens of owners. Second, availability on the date of the meeting, because the notary must be present at the meeting to certify the adoption of the articles of association. Third, a clear price agreed in advance. An overview of notaries can be found on the website of the Notarial Chamber of the Czech Republic.

When You Need an Attorney

The law does not stipulate the obligation of an attorney in the provisions on establishing an SVJ (Sections 1198 to 1204 of the Civil Code). An SVJ can be established without an attorney if the owners can agree on the articles of association, manage to convene a meeting, and prepare the application for registration. An attorney is therefore optional, not mandatory.

An attorney handles three things that most often go wrong. The first is the articles of association: to ensure they comply with the law, correspond to the building, and do not block subsequent administration. The second is the meeting: the invitation, attendance list, voting, and minutes so that the decision is legally unassailable. The third is the application for registration: correct attachments and signatures so that the court does not issue a summons for completion. The law does not reserve these three tasks for an attorney, but this is precisely where errors occur.

You can see the practical difference with a developer who sells a large building by apartments. For them, the SVJ is part of the sales process, and any delay affects the transfer date. Our Czech legal team will prepare a template of the articles of association, a schedule, and communication with the notary, so the developer does not have to deal with the details. For a small building with a few owners, a one-off consultation on the draft articles of association is sufficient.

A related topic is the actual division of the building into units. What belongs to it from a lawyer's perspective is discussed in the text on what is needed when dividing a building into units, as the establishment of an SVJ directly follows it.

Other Experts: Who is Useful Besides a Notary and an Attorney

The following tips are practical, not legal obligations. An accountant is useful right from the start because the association keeps accounts and needs to correctly set up advances and funds. A property manager takes over day-to-day operations, i.e., cleaning, minor repairs, and communication with suppliers. A tax advisor will help with any uncertainties regarding the association's tax return.

A new SVJ also needs several small things that no one considers a legal topic. A bank account for advances, building insurance, inspections of technical equipment, and contracts for energy and service supplies. The sooner these things are organized, the sooner the association can function as a legal entity and the fewer unnecessary disputes among owners.

When choosing experts, one principle helps: give everyone a clearly defined task and verify who is responsible for what. The notary is responsible for the registration and the public instrument, the attorney for the legal side of the articles of association and the application, the accountant for the accounting, and the manager for operations. Overlapping roles lead to everyone relying on someone else and no one finishing the job.

A Developer Establishes the SVJ Alone: When a Notary is Not Needed

An association of unit owners can also be established by a sole owner of all units, and in such a case, the articles of association do not require the form of a public instrument (Section 1200(1) and (4) of the Civil Code). A developer who has divided the building and has not yet sold any unit can thus approve the articles of association himself, without a constituent meeting and without a notary.

This is the fastest way, but it does not mean that nothing needs to be monitored. The association is created only upon registration in the public register. The law does not explicitly link the obstacle under Section 1198(2) to the first sale, but once the building is occupied, the Land Registry will not register the transfer of another unit without proven creation of the SVJ. The developer therefore establishes the SVJ in advance, ideally while still the sole owner, not at the moment of signing the contract with the third buyer. Delays at the registry court will thus not affect the transfer date.

The articles of association approved by the developer will affect the administration of the building for many years. Future owners will accept them when buying an apartment, so they should be balanced: they should not provide the developer with disproportionate advantages, as this is often the basis for later disputes with owners. Quality articles of association are also a selling point, as buyers read them.

Buyers should verify whether the SVJ is already registered before signing the purchase agreement. The registration is public and searchable in the register. A developer who has this in order gains credibility, and their sales run smoothly. Questions of dividing a building and selling by apartments are discussed in the text entitled A lawyer advises how to buy a building, divide it into units, and sell by apartments.

Typical Mistakes and Their Price

The first mistake is confusing the approval of the articles of association with the creation of the SVJ. Owners approve the articles of association, announce that the association exists, and start collecting advances. However, the association is created only upon registration, and until then it does not exist as a legal entity, so it cannot be a contracting party or have its own bank account. The price is uncertainty about who is responsible for existing commitments and delays in transfers.

The second mistake is underestimating the majority needed to approve the articles of association. The majority is calculated from all votes, not just those present, and with low attendance, the articles of association will not pass. Owners must then repeat the meeting, delaying registration. It helps to collect powers of attorney in advance, monitor the attendance list, and choose a date when most owners can attend.

The third mistake is incomplete articles of association. A legal requirement is missing, such as the determination of the first members of the statutory body, or rules for building administration. The registry court will then issue a summons for completion, and registration is postponed. Prevention consists of checking the draft articles of association against the list of mandatory requirements before the meeting.

The fourth mistake is establishing an SVJ with the assumption that "someone else" will solve everything. The developer relies on the attorney, the attorney on the notary, and the notary on the owners, and no one monitors the deadlines. The Prague-based legal team at ARROWS therefore determines at the beginning who provides what and by what deadline, and monitors the entire process from the draft articles of association to registration in the public register.

Risks in Establishing an SVJ

Final Summary

An SVJ is established by approving the articles of association and is created by registration in the public register; a notary is needed where the articles of association are adopted by multiple owners at a meeting or by agreement of all, and an attorney is not required by law but helps with the articles of association, meeting, and application. The article showed that a developer who establishes the association alone as the sole owner does not need a notary, and that the greatest risk is a delay in registration when the building is filled with buyers.

For a building owner or developer, this implies a clear sequence: first divide the building into units, then prepare the articles of association and registration, and plan sales so that the SVJ is registered before the building has four different owners. Postponing these steps leads to the Land Registry halting transfers and delaying sales.

The Prague-based legal team at ARROWS prepares SVJ articles of association, conducts constituent meetings, cooperates with notaries, and prepares applications for registration in the public register. Write to us at consultation@arws.cz or browse our real estate law services.